Bank Negara Malaysia is unlikely to follow other central banks in the region in lowering interest rates as a response to the ongoing US-China tariff war, according to finance experts.
Speaking to The Edge, they said the Malaysian central bank did not have any pressing reason to further reduce the overnight policy rate that it already cut by 25 basis points to 3 per cent in May.
“I think our economy is still doing well and we were ahead of the curve when we cut rates in May,” MIDF head of research Mohd Redza Abdul Rahman was quoted as saying.
“It was unnecessary to do so when looking from the macro indicators back then, but more of a foresight into the uncertainties going forward.”
Redza said the move has already led to visible improvements such as continued growth in the issuance of business loans and mortgages.
Distributive trade also hit RM108 billion in May, he pointed out when predicting robust gross domestic product growth for the country this year.
However, he said the situation may change if the US proceeds with slapping tariffs on a remaining US$300 billion (RM1.2 trillion) worth of Chinese goods including tech products, which would affect Malaysian E&E component makers.
UOB senior economist Julia Goh also said she did not expect BNM to announce another interest rate cut barring a significant decline third quarter GDP numbers and drop in local sentiments.
CIMB Group chief economist Donald Hanna told the business weekly that there was reason for BNM to consider lowering the OPR with low prevailing inflation, but said the move would not be in response to the US Federal Reserve’s cut.